A company that recycles waste rock from taconite production on the Iron Range is closing one of its plants because of low ore prices.
Grand Rapids, Minn.-based Magnetation, which mines the waste piles left behind in the mining process, will close its Plant 1 facility in Keewatin.
At the end of March, the company will lay off more than 40 employees at the site, its smallest and most expensive to operate.
Company officials say the move is driven by the falling global price of iron ore, which has dropped by more than 50 percent in the last 18 months. They blame falling prices on a massive increase in iron ore production in Australia, coupled with flat demand from China.
"The recent crash in iron ore is very dramatic and unexpected," said Magnetation president Matt Lehtinen, who said the current price is about $60 a ton.
"It was only seven months ago, all experts were saying iron ore won't drop below 90," he said.
Magnetation has grown rapidly since it built its first plant in 2008. Because it mines material that was already mined decades ago, the company saves money by not having to drill, blast and crush the rock. It has developed an innovative process using magnets to separate ore from the leftover tailings, which it uses to produce an iron ore concentrate.
The company opened its largest plant yet in late 2014 in Grand Rapids. It will still employ about 300 people at that plant and at a smaller plant in Bovey. Magentation plans to replace the lost production from Plant 1 at its newer, more efficient facilities, Lehtinen said.
The company also opened an iron ore pellet plant in Reynolds, Ind., last year, spurning overtures to also locate that facility in Minnesota.
But the job cuts make people on the iron range nervous, even though they have seen such cutbacks before, said state Rep. Tom Anzelc, DFL-Balsam Township.
"This is an indication that the surplus of material in the global market is affecting our operations," Anzelc said. "I hope that this is the end of it for us, but you never know."
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